Here's My View

"Now, if my analysis is correct, at some point, DOW/SP/Financials all pullback and tech takes up the role of leadership. I'm not sure if that means out and out plus side gains-which I assume it to mean that, or if it means that Q's just perform better on a relative basis."

A few days ago visibility was very clear and I could see the moves on 3C, now everything is getting muddled. I suspect that is because the original positions have been pieced apart into distribution and into other vehicles. While the timing and targets were off (and the timing and targets are rarely right with 3C because there is no timing/target component to seeing accumulation or distribution, it's just there), the observation was solid-XLF to back off while Q's rotate into leadership. This is an important and I think impressive distinction as usually the case would simply be a pullback across the entire market, not specific sector rotation. In the end, the Q's were the only of the eight averages to advance more than 1% (1.31%).


Also from the same post,

"In very broad terms, if the Q's can manage to stay alive above $44 on a close today, they keep the nice Broadening bottom I've been talking about alive and launch a rally from a sort of bull flag from within it-great positioning to do so-especially coming off a shakeout/pullback."

The Q's made a low of $43.86, holding that $44 level and closing well above which put them in a great position to fulfil the broaden bottom and head and shoulders bottom, click the link to go back to the video that laid out this scenario over a week ago and 2 days before the rally.



I thought that perhaps they'd both back off today as everything was murky and very frustrating to look at, but toward the end of the day, buyers stepped up in the Q's, not so much in the Russell 2K which surprised me and outright distribution in the XLF toward the end of the day. While I did not see this during the day, the old adage, the pros trade the close, was clearly evident in 3C today. So my "forecast" may be reflected by my positioning-Long Aug $46 QQQQ calls and I'm short the XLF via Aug. $20 Puts while I closed out the last of my XLF Aug $22 Calls yesterday and today.

I don't think Financials are done, but just in need of a rest, however, we'll have to see what develops then. I exercised all of my remaining July $30 DUG calls so I'm long DUG in shares and will stay there until we are in the $40's, probably mid $40's. I think that could happen this week. DUG looks like it'll consolidate Thursday a.m. Right now, a 10-bar moving average is tracking DUG on a daily chart and a 55 bar on an hourly chart.

Some other trades on:

I had a small position in COGT Aug $10 Puts, I doubled that today on some 3C action. This isn't my strongest trade, but I have a feeling it may develop further and with the possibility of a pullback in the market I wanted to decrease my net long positioning. For the same reasons I tripled my VRSN Aug $32.50 Puts. Even without 3C, this is a Bear Pennant (like a bear flag) and I expect a move down toward $29-$30. There are some others in this group that look good and bad-email me for a list.

I sold half of my Halo Aug $7.50 calls today, just locking in profits as I'm not sure how much upside is left there after that move. I added to my TSO Aug $20 calls today on the Energy Dept.'s report on the rise in gasoline stockpiles, which created a buying opportunity there. I didn't do anything with FDO today, but I'm tempted to add to that one, it's shaping up. CTAS has been a solid trade for me, I locked in some profits by selling 2/3 of my shares, the rest will ride until the trade collapses. A little weakness in CPSL today was a buying opportunity for me, I added to my Aug $5 calls. I also tried out one of David's trades-VMW Calls. I also added to GWP Aug $35 puts today and HNSN Aug $20 Calls.

That's it for positions today.

Around July 10th I said USO would be under $100 in the month, we're here today. However don't get too caught up in the falling oil trade. My 3C is tracing out a positive divergence (meaning accumulation) and USO has been falling in a descending wedge which has some pretty frightening prospects. Keep a close eye on developments there because we could very well see a sharp rally in oil. That's my breaking news.

Have a great Thursday.